HONG KONG: — One of the abiding appeals of Hong Kong to foreign investors has been this city's low tax rates. Although taxes have edged up slightly in recent years, the profit tax rate of 17.5 percent on companies and the maximum personal tax rate of 19 percent are among the lowest in the world.

But for many years, Hong Kong's economic policy makers have battled wild fluctuations in tax revenue because of what they say is the missing ingredient in the tax mix: a broad-based consumption tax.

In an effort to fill that gap, the Hong Kong government introduced a campaign Tuesday to win support from a wary public, business community and legislature for the introduction of a goods and services tax, which would probably be set at 5 percent.

And the government is dangling the carrots of further cuts to direct tax and increases in social welfare assistance to entice skeptics who fear that a goods and services tax would hurt the poor, increase the overall tax and administrative burden and stifle consumption spending amid Hong Kong's strongest economic boom since the 1980s.

A consultation paper on broadening the tax base, released by Henry Tang, Hong Kong's financial secretary, said that the 30 billion Hong Kong dollars, or $3.9 billion, raised by a goods and services tax would give the government the option of slashing either the profit tax rate to 12.5 percent or the average tax rate on salaries to 11 percent.

But the government plan faces stiff opposition. Concerned about a public backlash, it has proposed a nine-month community consultation period before it finalizes its preferred option. The consultation will end in March, just as an electoral college of mostly hand- picked representatives decides on whether Donald Tsang, Hong Kong's chief executive, will serve another five- year term.

"We will not be able to force it through," Tang was quoted by Bloomberg News as telling the media. "This is still very controversial."

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At the heart of the government's pitch is that such sweeping tax changes are necessary to ensure that Hong Kong remains competitive at a time when other countries in Asia and around the world are cutting direct taxes to attract investment and talented employees.

"Imagine if Hong Kong, which is well known for very low tax rates, announced it is going to knock three or five percentage points off the profits tax or salaries tax," said David O'Rear, chief economist for the Hong Kong General Chamber of Commerce. "That would make very big headlines."

The consultation paper said a cut to the profits tax, which is the largest single revenue item, raising 70 billion dollars a year, would have "the most significant and direct impact on Hong Kong's business sector."

Hong Kong government revenue depends heavily on profits tax, salaries tax and a variety of property taxes and charges. Yet the burden is carried by a relatively small group of taxpayers. According to the consultation paper, the top 100,000 salary earners pay 60 percent of salaries tax and the top 800 companies pay 60 percent of profit tax.

With 65 percent of the population of seven million paying no tax on income, it will be tough for the government to convince the public that a new tax on almost all forms of consumption is desirable. Some in business worry that a new tax will scare off tourists, despite government proposals to reimburse visitors for the tax on departure.